Gautam Traders
Distributor's Tips

Ask the young men desiring to enter business and you may find that many of them think distributorship as the easiest one. For them the case study of Gautam Traders would be quite revealing.

Sadhuram Gautam Proprietor, Gautam Traders

Started in 2053 BS, i.e. some eight years ago, the firm now records some Rs. 15 million turnover a month and the figure may look attractive even if 1% is retained as the margin after meeting all the expenses. But as Sadhuram Gautam, the proprietor of the firm recounts, the beginning was really tricky.

While working with Jyoti Marketing, a firm that was dealing mainly in cigarettes from the then Surya Tobacco Company (STC), now Surya Nepal, during the decade of 2040 BS, young Gautam was dreaming of having his own distributor company. So he left the firm soon after one year of work to realize his dream, but rejoined the same job after about one year of trying in vain to set up his own firm.

This time he started cultivating relationships with all concerned – the shopkeepers as well as the people in the producer companies. “I was not concerned with earning money. So I sort of became indispensable for the firm by around 2050 BS,” he recalls. “I was so concentrated on this that I hardly attended the college though continued appearing in the exams.”

Finally in 2052, he left Jyoti Marketing for good and formed his own firm. However, there was problem of seed money to start the business. But the good relationship that he had cultivated during Jyoti Marketing days started showing some positive signs. STC people were very cooperative and offered to provide his firm the products on good credit terms, bending the company rule of cash sales. The company offered Gautam the Naubise area (that included Thankot, Naubise, Palung, Kulekhani, Adamghat etc.), the same area that was earlier being cared by Jyoti Marketing.

So in 2053 Baishakh he started work in his new firm. But to play it safe, he had partnered with a couple of big retailers of that area with the expectation that the firm will thus be more comfortable in financial matters. However, it soon turned out that such a partnership would not work. The retailer partners were almost using up all the credit themselves and using the money for other lines of products.

Therefore, after about three months, he consulted the STC people for advice. As they, particularly the National Sales Manager, were quite impressed by the sincerity and diligence of Gautam, they advised him to go about it on his own. The foreigner VP Marketing of the company helped him to borrow the required money from a finance company. Then he bought the shares of the partners in the firm and made it entirely his own. The company further helped by financing the transport expenses from the company’s own account.

After the full-fledged operation in his own hands, Gautam increased the turnover to Rs. 3 million per month from around Rs. 1.5 million during Jyoti Marketing days.

However, Gautam also hastens to add that it was precisely due to the work experience he had in Jyoti Marketing that he got the opportunity of owning his own business and still that experience is helping him.

Once established in the business he changed his lender from the finance company to a commercial bank as he had already established his business reputation to qualify to become a bank customer and the interest rate in the finance company was exorbitantly higher than in the commercial bank. Another complaint he makes about the finance company is that they charged extra for the prepayment of the installments.

About two years ago Gautam added Kalimati to his area of distributorship.

Lessons

Be positive: According to Gautam, all his success was due entirely to the positive thinking. “That is the reason why Jyoti Marketing accepted me back when I wanted to go there again after failing to form my own company. And this is the reason why STC people were going out of their way to help me start the business.”

Be ready to take challenges: Marketing is never ending. Newer products are always coming into the market. Once you are established, your initial challenges may be over, but new challenges keep on cropping up.

Be calculative: Though business is related with risk taking, one has to be calculative in taking risks. “I borrowed the money against the collateral of the property with the calculation that I would be able to cope with the loss if it did not exceed Rs. 20 thousand a month.”

Keep your people happy: This applies for both - the associates (e.g. hawkers) as well as the retailers. Gautam lets his hawkers have their own time and do other activities as long as they complete the duty assigned to them. He tries to make sure that the hawkers and retailers get the supply regularly, sometimes even if the wholesalers may not get it. Gautam’s principal STC (now Surya Nepal) is also careful to help Gautam’s business.

Be responsible: Though Gautam’s family had some property that he could sell to raise the finance, he did not go for it even if he had to delay his pursuit of the dream business. “Had the property been on my own name, I would have sold it and arranged the finance. But as it was the common property of the family members, I did not take the risk though they were ready to let me sell it."

Be honest: Reporting your well-wishers about your exact situation helps. “That was how I was fortunate enough to get the exceptional help from the STC people and also from my family members.”

Problems

Being already established, Gautam says he does not face much problems now. But for the beginners there would be many.

For one, the banks do not accept small changes, especially if the distributor has no loan account with the bank concerned.

The second, but more important, is the malaise of bad credit. As cigarettes are items that almost every retailer must have in stock, Gautam’s sales are mostly in cash and he can exercise the discretion whom to grant credit or not, the new distributors would not have that comfort particularly if they select items that are not so essential to the shopkeepers.

This feature on SME has been sponsored by Laxmi Bank Ltd.

Send your feedback to the editor: bizline@mos.com.np  
2004 © Mercantile Communications Pvt. Ltd. P.O. Box 876, Durbar Marg, Kathmandu, NEPAL. Tel : 977 1 220 773, 243 566 . Fax: 977 1 225 407. Reproduction in any form is prohibited without prior permission. No part of the articles which appear in the internet version on NEW BUSINESS AGE may be reproduced without the permission of Mercantile Communications Pvt. Ltd. For reprinting rights, please write to us.  Send us your feedback : contact us.